LKCD v. CJL

FCMC 860/2019

[2021] HKFC 91

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 860 OF 2019

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J U D G M E N T

(ANCILLARY RELIEF)

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1.  This is a trial of the petitioner wife (“the wife”)’s application for ancillary relief against the respondent husband (“the husband”).  As can be seen from her open proposals, the wife is now asking for the following ancillary relief orders:

(1) A property transfer order that the husband shall transfer all his title and interest in the former matrimonial home at Flat B on 19/F of Block 5, Dawning Views, No.23 Yat Ming Road, Fanling, New Territories, Hong Kong (“the former matrimonial home”) to the wife at nil consideration but subject to 2 Charging Orders; and

(2) A nominal maintenance order of $1 per annum.

Background

2.  The wife is now 60 years of age, working as a private English tutor earning about $7,000 per month. 

3.  The husband is now 59 years of age and is a podiatrist by occupation.

4.  The parties were married in 1993.

5.  Within wedlock, 2 children were born, the elder son in 1994 and the younger daughter in 1996. Both of them have now attained majority with the elder son residing in the USA, whilst the younger daughter is working and staying in Hong Kong with the wife.

6.  The former matrimonial home was purchased in the joint names of the parties in 1999, with the current value estimated at $5,810,000 but subject to 2 Charging Orders resulting from 2 loans taken out by the husband without the wife’s prior knowledge.  In order to avoid foreclosure, the wife has started repaying some of the loans by her own means and with the assistance of the daughter.  The total amount of outstanding loans as at today is about $1,170,000.  In other words, the net value of the former matrimonial home stands at $4,640,000.

7.  According to the wife, the family emigrated to Australia in 2005.  The husband returned to Hong Kong in 2008 and worked with the Hospital Authority as a Podiatrist.  The husband left Hong Kong again for Turkey in April 2009, and the parties were separated since 11 April 2009.  The husband returned to Hong Kong in January 2011 but thereafter lived with another partner in the Lantau Island.

8.  In the year of 2018, there was a request by the husband to liquidate the former matrimonial home and for the proceeds of sale to be shared.  There was even suggestion that the parties had already been divorced in 2011, which was a fact totally unknown to the wife. 

9.  The husband’s request was rejected.  But around the same time or early 2019, some of the loans of the husband began to surface.  Letters from banks were received and Charging Orders were registered against the former matrimonial home. 

10.  On 22 January 2019, the wife finally decided to issue the present petition for divorce based on 2-year separation.  It was indisputable that at the time of issuance, the husband was still working as a Podiatrist at the Tuen Mun Hospital.  The petition for divorce was duly served on him who has returned a Form 4 and an Answer both dated 29 January 2019, but were only received by the Family Court Registry on 31 January 2019.  In the Answer, the husband stated that the parties’ marriage had already ended by a divorce suit at the First Instance Court of Tecate, State of Baja California, The Republic of Mexico.  He also enclosed a copy of a document in the Spanish language dated 13 April 2011 together with an English translation. From the translated text, it seems that the husband had taken out a divorce action in Mexico in April 2011 and without any contest from the wife, the Mexican Court had granted a decree of divorce on 13 April 2011.

11.  According to the wife, she has no knowledge whatsoever of such divorce in Mexico and she has never been served with any such court papers. 

12.  Subsequent to the Answer, the court has held a number of hearings but the husband has never attended any one of them.  On 24 July 2019, and in the absence of the husband, the court has adjourned the hearing to 19 September 2019 with a direction for the husband to attend failing which the court may proceed to strike out his Answer to the divorce petition. 

13.  According to the correspondence and further investigation, there was evidence to suggest that the husband has actually resigned from his post of Podiatrist at Tuen Mun Hospital shortly after he was served with the divorce petition and later even left Hong Kong for New Zealand.  According to the investigation carried out by the daughter through internet, the husband should now be practising as a Podiatrist in New Zealand at the address of 4, Levin Mall, 191-193 Oxford Street, Levin 5510, New Zealand.

14.  At the return hearing on 19 September 2019, the husband still failed to appear.  The court decided to give the husband a last chance to appear and so the hearing was again adjourned to 22 November 2019 with a further direction that should the husband fail to appear again, the court may strike out his Answer without further notice. 

15.  On 22 November 2019, the husband did not appear and his Answer was duly struck out and dismissed. 

16.  It was clear that without the attendance of the husband, a meaningful FDR could not be held and so the court decided to dispense with the FDR procedure.  The wife’s ancillary relief application was adjourned directly for trial.

17.  At today’s trial, the husband still failed to appear and being satisfied that proper notice has already been given to the husband, this court decided to proceed with the trial in his absence.

The Law on Ancillary Relief

18.  The jurisdiction of the Court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) which provides:

“4. Financial provision for party to a marriage in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of section 25(1), make any one or more of the following orders, that is to say-

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;

(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.

(2) Without prejudice to the generality of subsection (1)(c), an order under this section that a party to a marriage shall pay a lump sum to the other party-

(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;

(b) may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court.”

19.  In addition, the Court can also grant property transfer orders under section 6 of the MPPO with the more relevant sub-sections under (a) and (e) providing:

“(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say-

(a) An order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;

….

(e) an order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale,

and the court may make an order under paragraph (c) notwithstanding that there are no children of the family.

(2) Subsections (2) to (6) of section 6A apply in relation to orders under subsection (1) (e) as they apply in relation to orders under subsection (1) of that section. “

Section 7 Considerations

20.  In deciding on how to exercise its power in this regard, the Court is bound to consider Section 7 of MPPOwhichprovides:

“7. Matters to which court is to have regard in deciding what orders to make under sections 4, 5 and 6

(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

Case Law

21.  In LKW v. DD[1], Ribeiro PJ, after considering the recent line of English authorities of White v. White [2001] 1 AC 596; Miller v. Miller and McFarlane v. McFarlane [2006] 2 AC 618, has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief.  The following is a brief summary of His Lordship rulings in the case:

(1)  The old Hong Kong Court of Appeal case of C v. C [1990] 2 HKLR 183 should be over ruled (paragraph 22 of the Judgment).  In other words, the principle of “reasonable requirements” as laid down therein should no longer be followed.

 (2)  When the court exercises its discretionary powers under s.7 of the MPPO, guidance may properly be sought from the White v. White line of cases (paragraph 46 of the Judgment).

 (3)  Ancillary relief applications are highly fact-sensitive and judges dealing with them must ultimately be guided by s.7 of MPPO and the implicit aim of arriving at a fair financial outcome as between the parties (paragraph 52 of the Judgment).

(4)  In most cases, the available assets are usually not sufficient to cater for the needs of both parties so that the exercise does not progress beyond consideration of their needs (paragraph 54 of the Judgment).

 (5)  The principles underpinning the White v. White line of cases can be summarised as follows:

(i) The implicit objective of a s.7 (of MPPO) exercise is to arrive at a fair distribution of the assets as between the parties (paragraph 56 of the Judgment);

(ii) The concept of fairness requires the refutation of any gender or role discrimination (paragraph 57 of the Judgment);

(iii)With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a “yardstick of equal division” which should be departed from only for good, articulated reasons (paragraph 58 of the Judgment); and

(iv)The court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tends to deplete the parties’ (and the court’s) resources and to increase antagonism and discourage settlement (paragraph 62 of the Judgment).

 (6)  The actual steps to be taken by a court in undertaking the s.7 exercise should be as follows:

(i)  The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (paragraphs 71 to 73 of the Judgment);

(ii)  The assessment of the parties’ financial needs.  If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop here and there is no room to apply any sharing principle (paragraphs 74 to 79 of the Judgment);

(iii)  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle.  This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (paragraphs 80 to 82 of the Judgment);

(iv)  In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets.  Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (paragraphs 83 to 130 of the Judgment); and

(v)  The weight to be given to each of the factors is a matter of discretion for the court (paragraph 131 of the Judgment).

22.  I shall bear the above legal provisions and principles in mind when I come to consider the final ancillary relief orders to be granted under the circumstances of this case.

The Circumstances of the Wife

23.  The wife is now aged 60. She is working as a private English tutor earning about $7,000 per month.   She is now residing at the former matrimonial home with the younger daughter.   In her latest Form E, she stated her monthly outgoings amount to $6,456, including:

Items	Amount
(1) Utilities	$546
(2) Management fees	$1,018
(3) Food	$2,900
(4) Household expenses	$650
(5) Meals out of home	$100
(1) Transport	$80
(2) Clothing/shoes	$200
(10) Personal grooming	$100
(11) Entertainment/presents	$230
(12) Medical/dental	$300
(13) Tax	$332
	$6,456

24.  As far as her assets are concerned, the wife owns the following properties:

Assets	Value
Former matrimonial home (half share)	$2,320,000 (net)
2 bank accounts	$210,887.17
	$2,530,887.17

25.  The former matrimonial home is currently subject to 2 Charging Orders.  The first one relates to a loan taken out by the husband from the Dah Sang Bank, which has obtained a judgment against him in the District Court (DCCJ 2228/2019) for the judgment sum of $754,097.35 together with interest and costs.  The second one was obtained by the Hang Seng Bank in another judgment (DCCJ 3176/2019) for the judgment sum of $702,589.41 together with interest and costs.  The wife has been repaying part of the judgment debts on behalf of the husband and the total outstanding judgment debts under the 2 Charging Orders now stands at about $1,170,000. With a current open market value estimated at $5,810,000, the current net value of the former matrimonial home now stands at $4,640,000.

26.  According to the wife, she was diagnosed to be suffering from agoraphobia in 2003, which was an anxiety disorder in which a person fears and avoids places or situations that may cause the person to panic and feel trapped, helpless or embarrassed.  Although her conditions have improved over time, they have not improved to such an extent that would enable her to seek meaningful employment as it was still very difficult for her to travel by public transportation.  After hearing her evidence, I accept that she only has the earning capacity of $7,000 per month as a private English tutor.

The Husband’s Circumstances

27.  It is noted that despite having been properly served with the petition for divorce and the wife’s notice of application for ancillary relief, the husband chose not to attend any of the court hearings and has failed to file any evidence on his financial circumstances, including his Form E.  The only information that is known to the court is that the husband was and still is a Podiatrist, being a professional in the medical field.  He used to work in a public hospital in Hong Kong for quite some years until he was being served with the divorce papers, after which he simply resigned from the post and left Hong Kong for New Zealand to start a new practice there.  There is no evidence on how much he is currently earning, but according to the wife, the husband used to earn about $55,000 per month back in the year of 2009 as a Podiatrist in a public hospital.  The wife said that by taking into account the salary increase in the public sector over the years, there is reason to believe that his salary should be close to $100,000 per month when he last worked at the Tuen Mun Hospital in 2019.  I am satisfied that the husband must be earning a very decent income as a professional, as compared to the wife who is just working as a private tutor.

28.  There is no evidence on what assets the husband owns, except her joint share in the former matrimonial home.   But with his wilful default in appearance and refusal to provide evidence on his finances, it is reasonable for this court to draw an adverse inference that he must have owned some valuable assets, or otherwise, there is no reason why he would have given up the chance to make a formal claim on the former matrimonial home by appearing in the present proceeding.  Instead, he has chosen to claim his “share” by the indirect route of taking out various loans at around the time of the petition and allow them to be in default, resulting in 2 Charging Orders being charged to the former matrimonial home.

29.  Having drawn the above adverse inference, and bearing all the circumstances of this case in mind, especially the higher earning capacity of the husband as a medical professional, his financial conduct in relation to the former matrimonial home and the financial circumstances of the wife, I am satisfied that in order to cater for the reasonable needs of the wife, it is fair to make an order for the transfer of the former matrimonial home into the sole name of the wife.    It is also fair to grant a nominal maintenance order allowing the wife to reserve her position in the ancillary relief claim.

Orders

30.  Based on the above reasons, I hereby make the following orders in respect of the wife’s claim for ancillary relief:

(1) The husband shall transfer all his title and interest in the former matrimonial home at Flat B on 19/F of Block 5, Dawning Views, No.23 Yat Ming Road, Fanling, New Territories, Hong Kong to the wife at nil consideration but subject to any legal encumbrances, including the 2 Charging Orders at the sole costs of the wife within 1 month from the date of Decree Absolute;

(2) If the husband shall refuse to sign all the necessary documents to effect the transfer within time, a senior partner of the wife’s solicitors firm to be authorised to sign the transfer on behalf of the husband;

(3) There be liberty to apply; and

(4) The husband shall pay to the wife $1 per annum as nominal maintenance starting from Decree Absolute.

Costs

31.  Costs to follow event. The wife shall have costs of the ancillary relief application, including all costs reserved, to be taxed if not agreed.

[1] [2010] 13 HKCFAR 537